Publication in the Federal Register | CMS Fact Sheet

The 2026 proposed rule for Medicare Advantage plans would update requirements related to the plan-level annual health equity analysis and report, clarify and expand on rules restricting an MA plan's ability to create and use internal coverage criteria, and increase transparency of MA plan policies, among other provisions. Keep in mind that the proposed rule will be subject to review and potential adjustment by the new administration.

Updates to the Annual Health Equity Report Requirements

The Medicare Advantage proposed rule for 2026 would change a requirement that was established in the final MA 2025 rule related to a new annual health equity analysis. Last year, the Centers for Medicare & Medicaid Services established a requirement for each MA plan to create a health equity committee that will conduct and publish an annual health equity analysis starting July 1, 2025. The requirements specified that the analysis must look at aggregate metrics — across all items and services provided — related to how prior authorizations impact MA enrollees with certain social risk factors, such as disabilities, compared with the impact on those who do not have such risk factors.

The Medicare Advantage proposed rule for 2026 would change a requirement that was established in the final MA 2025 rule related to a new annual health equity analysis. Last year, the Centers for Medicare & Medicaid Services established a requirement for each MA plan to create a health equity committee that will conduct and publish an annual health equity analysis starting July 1, 2025. The requirements specified that the analysis must look at aggregate metrics — across all items and services provided — related to how prior authorizations impact MA enrollees with certain social risk factors, such as disabilities, compared with the impact on those who do not have such risk factors.

In the 2026 proposed rule, CMS wants to make these comparisons more detailed by breaking the data down by individual services, instead of looking only at the overall impact across all services.

As with the 2025 final rule, the report must include, among other metrics, comparisons of:

• The percentages of prior authorization requests that are approved, denied, or approved after an appeal.
• How many requests experience delays or extensions.
• The average time it takes to get a determination.

In addition, to make the reports easier to follow, CMS would require an executive summary of the analysis results to explain key findings, provide any needed context, and highlight important results. CMS also is requesting input on how services should be grouped in the report and how to protect the privacy of enrollees. APTA has provided comments on previous rulemaking related to grouping of services and will submit comments on this rule before the Jan. 27 comment deadline.

If these changes are finalized, a clearer picture of how MA plans use prior authorization will allow for better monitoring and advocacy. Given the current lack of transparency in MA prior authorization data, there is wide belief that MA plans overuse prior authorization, especially when compared with traditional Medicare. These annual reports will help reveal any unfair delays or barriers to care for people with disabilities — many of whom receive physical therapist services.

Clarifying Rules on Internal Coverage Criteria

In 2024, CMS introduced rules that restricted MA plans' ability to create their own internal coverage criteria when criteria already were clearly established under traditional Medicare, the goal being to help prevent MA plans from limiting services that otherwise would be covered by traditional Medicare. However, there is still confusion about what constitutes "internal coverage criteria" and how these new rules apply to prior authorization.

CMS plans to clarify these provisions in the 2026 proposed rule by:

• Using clearer language. Instead of "general provisions," CMS proposes using the term "plain language of applicable Medicare coverage and benefit criteria." The agency says this helps clarify limitations on when MA plans can create new rules for items or services that are already covered by Medicare.
• Establishing clinical benefits versus harms. Where permitted to establish new coverage criteria, MA plans must show that those criteria are based on evidence that supports patient safety and would benefit patients clinically. CMS is proposing to remove the requirement that the benefits "are highly likely to outweigh any clinical harms," since it was difficult to enforce.
• Defining internal coverage criteria. CMS also wants to clearly define what constitutes "internal coverage criteria," or ICC, which it did not define in the 2024 final MA rule. Details on that definition and implications for coverage are discussed below.

Internal Coverage Criteria

Specifically, CMS proposes to define internal coverage criteria as "any policies, measures, tools, or guidelines, whether developed by an MA organization or a third party, that are not expressly stated in applicable statutes, regulations, [national coverage determinations], [local coverage determinations], or CMS manuals and are adopted or relied upon by an MA organization for purposes of making a medical necessity determination at § 422.101(c)(1). Further, internal coverage criteria include any coverage policies that restrict access to, or payment for, medically necessary Part A or Part B items or services based on the duration or frequency, setting or level of care, or clinical effectiveness of the care."

CMS clarifies that this definition includes policies or guidelines used by MA plans to determine whether a service is medically necessary. CMS proposes that each internal criterion must be based on well-established treatment guidelines and evidence, and any additional coverage rules for services such as physical therapy must be based on evidence that supports patient safety. If an MA plan's ICC are built into an automated system, the details of that criteria must be publicly accessible.

The agency also clarifies that using utilization management, including prior authorization, is not considered ICC — however, any ICC applied during prior authorization are subject to the rules.

CMS also proposes new rules to limit how MA plans can use internal coverage criteria:

• First, it would prohibit the use of ICC if it has no clinical benefit and is only intended to reduce utilization.
• Second, it would prohibit blanket policies that deny coverage without considering individual patients' needs and clinical history in determining whether a service is clinically effective.

Public Availability of Information

To ensure that the public can easily access and understand that the specific internal criterion noted is being applied and may be specific to the MA plan, CMS proposes that the following be implemented by Jan. 1, 2026:

• MA plans must clearly mark any internal coverage criteria in their policy documents.
• These documents, as well as all items or services subject to ICC, must be easily available online, free of charge, and without needing to create an account or submit personal information.
• Supporting evidence for each internal coverage rule must be included in the form of footnotes.

Additional reporting requirements will help limit common practices that MA plans employ to obscure and hide their coverage criteria, especially where those criteria are used to make medical necessity determinations in prior authorization programs on duration, amount, and frequency of services.